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Use Holiday Break to Tackle Student Loan Debt

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Ashley Fleming is hoping for a Christmas miracle. The 24-year-old college senior is at risk of not graduating unless she can come up with the $23,800 she owes American University for her fall tuition.

“I really just exhausted a number of options,” the first-generation college student says.


Ashley Fleming is raising money on GoFundMe for her college tuition after exhausting other options.

Fleming took out some federal loans, but not enough to cover all four years. She turned to private loans, but with a minimal credit history and no co-signer, she doesn’t qualify for enough to cover her full tuition. She took a year off to work and save, but she’s not allowed to take any more time off. Her fall 2015 tuition is past due, and she can’t enroll in her final semester of classes until she pays. She risks losing her spot at the university if she can’t enroll. Her last resort is the GoFundMe campaign a friend created in her name, which has raised more than $16,000 of the money she needs.

A spokesperson for American University said they are unable to comment on the status of individual students.

Although her circumstances are somewhat unique, Fleming isn’t alone. The typical college student funds around 11% of her tuition from personal savings and income, according to a 2015 report by Sallie Mae. On top of that, the average student borrows 16% of his tuition in student loans.

Whether you’re paying tuition or repaying student loans, the holidays can be a great time to make a dent in your student debt. Here are three ways to do so:

1. Put ‘student loan contributions’ first on your wish list.

Presents are exciting to unwrap, but who really needs another DVD box set or more fancy bath products? This year, ask your friends and family for contributions toward your student loans instead.

However, if you receive cash or a check intended to pay down your loans, it could be tempting to spend it elsewhere. “That’s just human nature,” says Ravi Sawhney, founder of the new crowdfunding platform LoanGifting. The site allows borrowers to create a profile and collect donations toward their federal or private student loans. LoanGifting takes 3% of all contributions and pays the rest directly to the loan servicer with specific instructions to apply the contribution to the loan balance.

“You’re eliminating future interest,” Sawhney says, adding, “it’s so easy to underestimate how much friends and family are willing to throw in towards paying down student loans.”

2. Forgo gift exchanges and pay your loans instead.

If you’re uncomfortable asking your friends and family for contributions to your student loans, try this approach: Instead of exchanging gifts, make a deal that you’ll spend a few hours of quality time together. Suggest a low-cost outing — window shopping, a coffee date or a movie night at home — and then put the money you save toward your student loans. Paying more than the monthly minimum on your loans will help you pay them off faster and save on interest.

3. Research repayment options during break.

In your days off around the holidays, take a break from the festivities and research your repayment options. If you haven’t elected otherwise, you’re on a standard repayment plan, which means you’ll make equal monthly payments for 10 years. But there are six other student loan repayment plans, including four income-driven plans that allow you to pay based on what you earn.

Additionally, if you have a steady income and a good credit score, you may be able to save by refinancing your student loans. See how much you could save and compare offers from up to 11 lenders through our partnership with student loan refinancing marketplace Credible.

However, keep in mind that your federal loans become private loans after you refinance, which means you won’t necessarily be able to choose your repayment plan or postpone your payments through deferment or forbearance.

Fleming’s Christmas wish

Fleming has received contributions to her GoFundMe campaign in increments of $5 to $2,848, some with notes like, “Hang in there, it was my dream to graduate college too. I made it! Merry Christmas.” She’s hoping to raise the rest by Christmas Day.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @teddynykiel.

This article was originally published Dec. 22, 2015. It was updated Dec. 23, 2015.

Photo courtesy of Ashley Fleming.